1) Know What You Have and Where it Is.
Take some time to organize your financial documents. Financial calculators are great, but they do require you have detailed information on hand to get accurate results.
2) Evaluate Your Future Income Needs.
List everything you’ll need to have money for in retirement, such as increased medical insurance premiums, vehicle maintenance and insurance, and day-to-day expenses. Don't forget to include important quality-of-life expenses like more travel or new hobbies that you would like to pursue when you have the free time you've been waiting for. Some current expenses may disappear, including a second car, work wardrobe, and perhaps even your mortgage payment.
3) Estimate What You Have to Work With So Far.
In addition to knowing your current retirement savings balances, find out exactly how much debt you have and how much to expect from such sources as pensions. Check your Social Security benefits online.Opens in New Window
4) Decide What Matters Most.
If a retirement full of travel has been your dream, plan ahead to make it a reality. For other people, a quiet, simple and stress-free retirement home life is the goal, in which case your expenses may well drop substantially in retirement. Unless you have a very comfortable nest egg set aside, consider downsizing your dwelling. With children grown, smaller homes are often a good fit and can save money on expenses like real estate tax and upkeep.
5) Prepare for Surprises.
You never know. Allow for changes such as illness, divorce, or a layoff that can affect your financial situation. And don’t forget to factor in inflation. Those complex factors are what make retirement calculators helpful.
6) Make Saving a Priority.
It’s never too early to begin. Make saving automatic to the greatest degree possible. If you can manage it, make the maximum allowable contribution to an IRA. If your employer offers a 401(k), take advantage of it, especially if they offer a match.